The Economic Times daily newspaper is available online now.

    US sanctions hit India, Iran gas field talks

    Synopsis

    Sanctions are a huge project execution risk because it would be hard to obtain finance and rope in oilfield services companies.

    oil-pipeline-
    Some US curbs against Iran took effect earlier this month and those related to the petroleum sector would be effective from November.
    NEW DELHI: Talks between India and Iran over the rights to develop a gas field in the Islamic Republic have stalled in the wake of fresh US sanctions, people familiar with the matter said.

    A consortium of Indian state-owned oil companies, led by Oil & Natural Gas Corp, has been negotiating with Iran for two years for the development rights of Farzad B gas field it discovered in Iran a decade ago. The resurrection of sanctions prompted Indian companies to freeze the matter.

    Sanctions are a huge project execution risk because it would be hard to obtain finance and rope in oilfield services companies, which are mostly US-controlled, people familiar with the matter said.

    This follows the cancellation of a $5 billion contract to develop the massive South Pars offshore gas field by French giant Total, signalling the wariness of foreign companies in participating in Iran’s exploration sector under sanctions.

    India imports almost 10% of its crude oil requirements from Iran and is in negotiations with the US for a sanctions waiver by offering to partly cut its purchases from the republic. Officials of the two countries are slated to meet next month to decide on this.

    Indian officials will likely project the technical limitations of their refineries as well as increased purchases of the US crude oil lately by the Indian refiners to seek the exemption, people familiar with the matter said.

    India, meanwhile, continues to import Iranian oil that comes with a longer credit period and lower freight charges. Iran has offered its carriers and insurance for cargoes turned away by other shippers and insurers due to the sanctions.

    Some US curbs against Iran took effect earlier this month and those related to the petroleum sector would be effective from November, which is when their impact will become clearer to Indian oil companies.

    The development of Farzad B has been delayed for years due to US sanctions as well as sluggish decisionmaking by Iranian authorities. After staying away from the Iranian field during the previous sanctions years, the Indian consortium revived its efforts to obtain a licence to develop the field in 2016.


    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more

    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more
    The Economic Times

    Stories you might be interested in